Hewlett-Packard (HPQ), headquartered in Palo Alto, California, is one of the world’s largest information technology companies and a leading provider products, technologies, software, solutions and services. HP has seen its shares bounce back from their late-2012 lows, and the company beat street estimates in its latest quarterly results. For the first quarter of fiscal 2014, the company topped street estimates with GAAP diluted net earnings per share up 17% to $0.74 on net revenue of $28.2 billion, down 1% from the prior-year period and flat on a constant currency basis. Analysts are currently bullish about the company on the back of robust cash flow, earnings growth and opportunities in the 3D printing space. The stock is up 19% YTD.
Founded in 1939 by Bill Hewlett and Dave Packard, Hewlett-Packard is one of Silicon Valley’s oldest companies. The core of HP’s current strategy is focused on providing unique technology solutions for the “New Style of IT.” HP believes it has the combination of hardware, software, scale and innovation to provide the integrated solutions that help customers realize the full benefits of cloud, security, big data and mobility.
The company is currently in the middle of its multi-year turnaround effort that was announced in October 2012. The effort is spearheaded by CEO Meg Whitman, who believes it will take five years to right the ship. In May 2012, HP initiated a multi-year restructuring designed to realign its cost structure and create investment capacity to drive innovation against its strategic priorities, strengthen market leadership and rebuild its balance sheet while returning capital to shareholders. By 2016, Whitman expects the company’s revenues to be growing in line with gross domestic product (GDP), with operating profit growing faster than revenues, industry-leading margins and disciplined capital allocation.
The landscape of the technology industry is changing with increasing preferences towards mobile devices, software and services, and cloud computing. HP has been striving to shift focus from its traditional PC-centric business to the profitable server, storage, mobile and cloud computing space. IDC said recently that worldwide PC shipments fell by 9.8% in 2013, slightly better than a projected decline of 10.1%, but still the most severe contraction on record. Overall growth projections for 2014 were lowered by just over 2%, and subsequent years have been lowered by less than 1%. HP has seen rivals such as Apple (AAPL), Google (GOOG), Samsung Electronics Co (SSNLF), and Lenovo (LNVGF) expanding its product and service offerings with integrated products and solutions. Lenovo, which bought IBM’s PC business in 2005, has outpaced HP with with a 19% share of the PC market in the fourth quarter of 2013, according to IDC.
The company’s operations are organized into seven business segments: Personal Systems; Printing; the Enterprise Group; Enterprise Services; Software; HP Financial Services; and Corporate Investments. The Personal Systems segment and the Printing segment were structured beneath a broader Printing and Personal Systems Group aimed at capitalizing on rapidly shifting industry trends.
HP’s offerings in the first five divisions include personal computing and other access devices; imaging and printing-related products and services; enterprise IT infrastructure, including enterprise server and storage technology, networking products and solutions, technology support and maintenance; multi-vendor customer services, including infrastructure technology and business process outsourcing, application development and support services, and consulting and integration services; and IT management software, information management solutions and security intelligence/risk management solutions. HP Financial Services offers leasing, financing, utility programs, and asset management services for large enterprise customers. Corporate Investments includes HP Labs, the webOS business and certain business incubation projects.